NIKE‚ INC.: COST OF CAPITAL Professor Meiberger By Sebastian Gomez Team 5 Cohort: Front The portfolio manager for NorthPoint Group‚ Kimi Ford was deciding if she should pitch in and draw Nike within NorthPoint Large-Cap Fund. Nike‚ which did not have the strongest fiscal year results in 2001‚ was implementing new strategies to heighten its revenue and income. Kimi Ford‚ after having carefully read reports by analyst‚ and their input within this publicly traded company decided to emphasize
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analysis assumes Nike debt is trading at par – it is not ▪ Equity should be based on market value‚ not book value ▪ Hence total will be based on market cap.‚ not balance sheet ▪ Her debt cost is wrong ▪ She should use the current or projected cost rather than a historic one ▪ i.e. use a Bloomberg terminal (other terminals are available) to research yields on debt of the same credit rating as Nike ▪ It is unlikely Nike has a cost of
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NIKE‚ INC.: COST OF CAPITAL On July 5‚ 2001‚ Kimi Ford‚ a portfolio manager at NorthPoint Group‚ a mutual-fund management firm‚ pored over analysts ’ write-ups of Nike‚ Inc.‚ the athletic-shoe manufacturer. Nike ’s share price had declined significantly from the beginning of the year. Ford was considering buying some shares for the fund she managed‚ the NorthPoint Large-Cap Fund‚ which invested mostly in Fortune 500 companies‚ with an emphasis on value investing. Its top holdings
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Corporate Finance Nike‚ INC: Cost of capital 1. What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? Definition of WACC (Weighted Average Cost of Capital): WACC is basically the average of the cost of finance (debt and equity). Since a company’s assets can be financed by debt or equity‚ WACC can show the averages of the costs involved in the sources of financing. These costs are then weighted
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Case note on Nike Cost of Capital Group 2 Members : Devendra Rane‚ Vivekkumar Nema‚ Chandrashekhar Joshi‚ G. Ajithkumar‚ Prakash Shetty Case Background: * NorthPoint Large Cap Fund weighing whether to buy Nike’s stock. * Nike has experienced sales growth decline‚ declines in profits and market share. * Nike has revealed that it would increase exposure in mid-price footwear and apparel lines. It also commits to cut down expenses. * Kimi Ford’s initial assessment at a discount rate
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1.0 Summary of case study NorthPoint Group is a mutual fund management firm which invested mostly in Fortune 500 companies. Its top holding included ExxonMobil‚ General Motors‚ McDonald’s‚ 3M and other large cap. NorthPoint Group performed extremely well although the stock market had declined over 18 months. In 2000‚ it earned a return of 20.7% while the S&P 500 fell 10.1%. At June 2001‚ NorthPoint Group’s return stood at 6.4% while the S&P 500 stood at -7.3%. Nike‚ Inc. is an American multinational
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Fund‚ Kimi Ford‚ considers buying shares of Nike‚ Inc. for her mutual fund management firm. In the mid of 2001‚ Nike arranges for an analyst meeting to disclose its Fiscal year results and also to discuss on renewing its strategies to boost its sales growth‚ profits and market share which were all declining. To cope from the situation it decides to develop athletic shoes in the mid-price segment‚ enhance revenues from its apparel line and also commits to control its expenditure. When Ford realizes
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|Corporate Finance | |Nike Case | | | | |
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Blog Number One “Oh‚ You are so Funny and I’m Love it” By: Kenneth Esteleydiz de Guzman (Submitted for an Essay Class in DLSUD) I know that you have already watched a lot of funny films around. But one thing you shouldn’t miss is the movie directed by Ms. Joyce Bernal‚ and was produced by Spring Films. This movie will surely make you giggle and laugh so hard! I swear to you that every minute that you will spend in this film will never make you feel doubtful and regretful for the fact that this
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